To get a loan to build a house, you must understand that a collateral is always needed. But not everybody is comfortable with this arrangement.
What becomes of you if you are unable to pay back? Let's talk about all the means then you choose the one most suitable for you.
1. PERSONAL SAVINGS
This is by far the most popular method people are using to get their house built, there is no fear of creditors knocking on your door and it gives a lot of rest of mind.
Honestly, no matter how small your salary is, you can build a house if you set your mind towards it. There is always a case of you saving from whatever your income is. Study has showed that 30% of the moderate level of what we get monthly goes to buying very unimportant goods and junks.
So you can cut unnecessary costly foods in costly restaurants.Sit down, make an inventory of wasteful spendings and start saving 20% only of your income, no matter how small in 2 years time you will start a home of your own,whatever you are able to save will be enough to start your house.
Professionals benefits most from this type, with up fronts, profit sharing and commissions amongst others.
Personal savings amongst others is the first option if you want to acquire a land and building a house.
i. There is no debts to service or pay no matter the turns of things.
ii Rest of mind, since there is no creditor coming to knock on your door.
iii.It is healthy at the long run, when your mind is free of fear you are most likely to live a heal their life and avoid hypertension.
iv. It gives you room to channel your earnings towards something valuable and gives you more responsibility.
i. It may take a long time to achieve your dream
ii It bites on your income and may moderate your style of living
iii.Staying for too long, might make somebody to loose interest altogether and abandon the project.
iv. There is alway fear of families of (Omo Onile) Landowners rising up to lay dubious claim on your land especially when the seller is dead, because of long time of building.
v. There is always probability that the savings might be converted for other uses.
vi. Inflation on cost of materials and labor may also be seriously catching in.
2. WORKPLACE MORTGAGE AND LOANS
This is most attractive to workers that are planning to invest in Real Estate. Though it is mostly used for personal buildings, but giving honest advice from me, it is better for you a young man or woman to build it, then rent out and let the building pays for the loan back while you sit down and collect rents . Then now use the dividends to finance another project.
The National Housing Fund remains the most attractive leeway for those who desire to build with loan especially the civil servant. It is designed by the government to aid the federal Mortgage Bank of Nigeria, with less bureaucracy unlike before and it offers presently a maximum of N5m at an interest rate of 6% and a whopping 25 years of repayment tenor.
This fund can be joined through any of the mortgage banks in Nigeria.
i. Fast completion of building
ii. The paying back period is long and is remove automatically from your monthly income without you feeling the pinch because it is usually very small.
iii.The interest rate is very low.
iv. If you understand real estate, this opportunity can turn you into a millionaire.
i. You are indebted for a very long time.
ii. Interest rates no matter how small will still eat into your pocket.
iii.Sudden severance of your job, may leave you in the cold against your creditors, what if you are unable to get another job.
3. THRIFTS AND COOPERATIVES' HOUSING SCHEMES
This method is becoming more popular among the young workforce and a lot of cooperative housing schemes are springing out daily. It employs the same old mold of operation, only that in this case you are expected to own a home. All members pool resources together to build houses for each member in areas of choice. This is an alternative to mortgage for the low income earners, who makes monthly minimal contribution overtime.
i. Just as in mortgage loans, fast completion because of readily available funds.
ii. At times members purchase large expanse of land and divide between members which is more comparatively cheap, they get professionals to do the projects in large volume, and the professionals in turn charge less because of large numbers of jobs. Housing cost can be reduced by 25% with this method.
iii.Encourages other mutual benefits and promote friendliness.
i. It definitely goes without saying that the cooperative society of choice must be well researched and thoroughly investigated to ascertain the commitment and integrity of its members. Some members can decide to default and this may lead to the collapse of the cooperative club.
4. LAND SPECULATION & CAPITAL MARKETS
Have you packed into a developing area before, which is still full of vegetation? Within 3 months what you will notice is a surge in inflow of people of that location either they are trying to secure their land or are encouraged by the moving into the location by you, and are sure of meeting neighbors to talk to, transact business or probably for security, whichever, there is always a trend of people moving into a location because somebody like you have just moved in. So what happens? as you have more traffic, the value of properties in that area will naturally increase.
So when you are buying a land, why not make it two or more, as you build one, the other plots will appreciate in value sell them and use it to complete your resident house.
i. You may not feel the pinch of paying so much because of your investment that will augment for you.
ii. This may be a starting point for you in real estate investment, this will give you a first hand knowledge on how it works
iii.Benefits like naming of the street after your name and others.
iv. You are not bothered by repayment of loans, since you are building from your investment.
i. Because this is a fresh area with less development, you may not have access to some infrastructural facilities already existing in the main towns.
ii. It may take some waiting for other lands to appreciate before you can complete your project.
5. SOURCING OF LOANS FROM YOUR BANK
With consolidation of Nigerian Banks, there is a lot of money now available for business transactions, so banks these days are ready to loan you money to be able to complete your building, though this process is the most difficult to choose.
i. Completion of job in time because of availability of funds
ii.If you are sure of the location then you may sell the building and make quick profit because of fast completion
i. Request for collateral
ii. Bureaucratic bottlenecks
6. DIVIDENDS FROM HIGH YIELD INVESTMENT PROGRAMS (HYIP) AND SHARES
Some smart young couples are making use of this program to develop their homes stressfully. Though high yield, high risk, this is by far the best and the easiest way I can recommend to anybody when building their house. Before present problems with most of the HYIPs, There is an high yield investment program being promoted by an Oil and Gas firm in Nigeria called Nospectus, you invest N450,000 in their company and they in turn by the end of every month will be paying you N40,000 in 12 months you would have made 100% turnover, and the good thing about this company is that you can withdraw your capital of N450,000 anytime you want to.( Also you have Clubfreedom among others.)
A couple grew theirs to N200,000 per month i.e. 5 slots and they build their house of choice so stressfully, imagine having N200,000 per month as an additional salary without any further effort. “Note: though I am not recommending them, I know of quite a few people in this scheme.
There are a lot of HYIP's also going on internet but you have to consult those that are already into it before you get defrauded. Less risky ones is to buy shares, bonds etc and use the profits to build your house.
“My general advice is to start small”
i. Very easy to generate steady flow of cash for your building.
ii. The more investment , the more money to help in financing your building project.
i. High risk
ii. Shares may plummet
iii.Companies can pack up tomorrow
iv. Wrong decision by the investment company may lead to closure of business thereby affecting you.